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2004 Supreme(Kar) 595
Karnataka High Court
BHAGAWAN - Appellant
Versus
DWARAKANATH - Respondent
Decided On : 10-26-04
R.S.A. : 137 of 1999
F.V.PATIL, G.S.BHATT
Headnote:Specific Performance
SPECIFIC RELIEF ACT, 1963 - Section 19 (b)-Specific Performance - If A purchases any property from B and thereafter B sells the same to C , the sale in favour of A , being prior in time, prevails over the sale in favour of C as both A and C acquired legal rights- But where one is a legal right and the other is an equitable right.
[S. B. Majage, J]: A bona fide purchaser for value consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law.
Cases Referred: AIR 1980 Gau 44; 1982 (1) Kar. L. J. 385.
Relied:(2000) 6 SCC 685; AIR 2001 SC 1658; AIR 2001 SC 1658 ; (1809) 16 VES 249, 254: 33 ER 978; AIR 1932 P C 228; AIR 1932 Mad 265; AIR 1965 Pat 467; AIR 1968 Mad 383; AIR 1971 Mys 271; AIR 1967 SC 249.
Distinguished:AIR 1972 Bom 100; AIR 1974 Raj 188; AIR 1944 Bom 358; ILR 1998 Kar 485; AIR 2002 SC 1279; AIR 1998 SC 2028; AIR 1996 SC 2814; AIR 1996 SC 2150; ILR 1995 Kar 570.
Transferee s claim
SPECIFIC RELIEF ACT, 1963 - Section 19(b) - Transferee s claim -Transferee claiming under Vendor by a title arising subsequent to contract of which specific performance is sought -Excluded from purview of clause (b) - Requisites to fall within.
[S. B. Majage, J]: A transferee must show that: (a) he has purchased for value the property (which is the subject-matter of the suit for specific performance of the contract); (b) he has paid his money to the vendor in good faith; and (c) he had no notice of the earlier contract for sale (specific performance of which is sought to be enforced against him).
Deemed notice
TRANSFER OF PROPERTY ACT, 1882 - Section 3 -Deemed notice -If purchaser rely upon assertion of vendor or on his own knowledge and abstain from making inquiry into the real nature of possession of tenant, he cannot escape from consequences of deemed notice under Explanation II.
[S. B. Majage, J]: Notice could be actual or constructive or deemed or implied. However, from the definition of the expression "a person is said to have notice" in Section 3 of the Transfer of Property Act, it is plain that the word "notice" is of wider import than the word "knowledge". A person may not have actual knowledge of a fact but he may have notice of it having regard to the aforementioned definition and Explanation II thereto. If the purchaser rely upon the assertion of the vendor or on his own knowledge and abstain from making inquiry into the real nature of the possession of a tenant, he cannot escape from the consequences of the deemed notice under Explanation II to Section 3 of the Transfer of Property Act. In view of the said Explanation II, a statutory presumption of notice arises against any person, who acquires any immovable property or any share or interest of the title, if any, of the person who is for the time being in actual possession thereof. Whenever possession of a property is in the hands of a tenant, the intended purchaser must make enquiry with that tenant to ascertain the nature of possession. It may be mentioned here that Explanation-II was introduced into the Transfer of Property Act by the Amending Act 21 of 1929. Of course, even prior to that amendment also, the law, as declared in decided cases, was that, when a person purchased property from the owner knowing that it is in the possession of another, he is under a duty to inquire into the nature of that possession and in the absence of such inquiry, knowledge of title under which possession is held should be attributed to the purchaser.
Cases Referred: 1982 (1) Kar. L. J. 385.
Distinguished: AIR 1972 Bom 100 ; AIR 1974 Raj 188; AIR 1944 Bom 358; ILR 1998 Kar 485; AIR 2002 SC 1279 ; AIR 1998 SC 2028; AIR 1996 SC 2814; AIR 1996 SC 2150 ; ILR 1995 Kar 570.
Relied:AIR 1980 Gau 44; (2000) 6 SCC 685; AIR 2001 SC 1658; AIR 2001 SC 1658; (1809) 16 VES 249, 254: 33 ER 978; AIR 1932 P C 228 ; AIR 1932 Mad 265; AIR 1965 Patna 467; AIR 1968 Mad 383; AIR 1971 Mys 271; AIR 1967 SC 249.
Deemed notice
TRANSFER OF PROPERTY ACT, 1882 - Section 3 -Deemed notice -If purchaser rely upon assertion of vendor or on his own knowledge and abstain from making inquiry into the real nature of possession of tenant, he cannot escape from consequences of deemed notice under Explanation II.
[S. B. Majage, J]: Notice could be actual or constructive or deemed or implied. However, from the definition of the expression "a person is said to have notice" in Section 3 of the Transfer of Property Act, it is plain that the word "notice" is of wider import than the word "knowledge". A person may not have actual knowledge of a fact but he may have notice of it having regard to the aforementioned definition and Explanation II thereto. If the purchaser rely upon the assertion of the vendor or on his own knowledge and abstain from making inquiry into the real nature of the possession of a tenant, he cannot escape from the consequences of the deemed notice under Explanation II to Section 3 of the Transfer of Property Act. In view of the said Explanation II, a statutory presumption of notice arises against any person, who acquires any immovable property or any share or interest of the title, if any, of the person who is for the time being in actual possession thereof. Whenever possession of a property is in the hands of a tenant, the intended purchaser must make enquiry with that tenant to ascertain the nature of possession. It may be mentioned here that Explanation-II was introduced into the Transfer of Property Act by the Amending Act 21 of 1929. Of course, even prior to that amendment also, the law, as declared in decided cases, was that, when a person purchased property from the owner knowing that it is in the possession of another, he is under a duty to inquire into the nature of that possession and in the absence of such inquiry, knowledge of title under which possession is held should be attributed to the purchaser.
Cases Referred: 1982 (1) Kar. L. J. 385.
Distinguished: AIR 1972 Bom 100 ; AIR 1974 Raj 188; AIR 1944 Bom 358; ILR 1998 Kar 485; AIR 2002 SC 1279 ; AIR 1998 SC 2028; AIR 1996 SC 2814; AIR 1996 SC 2150 ; ILR 1995 Kar 570.
Relied:AIR 1980 Gau 44; (2000) 6 SCC 685; AIR 2001 SC 1658; AIR 2001 SC 1658; (1809) 16 VES 249, 254: 33 ER 978; AIR 1932 P C 228 ; AIR 1932 Mad 265; AIR 1965 Patna 467; AIR 1968 Mad 383; AIR 1971 Mys 271; AIR 1967 SC 249.
( 1 ) WHETHER a purchaser of property could be said to have deemed or constructive notice of the right of a person in possession of it or a portion of it and whether relief of specific performance be refused in such a case to that person claiming earlier right over the property, are the short points on which the result of this appeal depends.
( 2 ) BRIEF facts, giving rise to the present appeal, are: (a) The appellant-plaintiff (hereinafter referred as 'plaintiff) brought suit in O. S. No. 40 of 1990 before the Civil Judge, Hubli against respondents defendants (hereinafter referred as 'defendants') for specific performance of contract of sale by registered sale deed stating that, on 21-6-1989, the defendants 1 to 3 have entered into an agreement of sale in his favour after receiving Rs. 35,000/- out of consideration of Rs. 80,000/- with regard to suit property, portion of which shown as EFGH (in the plaint sketch filed with the plaint) is in his possession as a tenant, though defendants 4 to 6 had thrown out his belongings from the portion marked as ABCD (in the sketch) in his possession, when he was out of Hubli on 10-3-1990, after the suit property was purchased in the name of defendant 5 under registered sale deed from defendants 1 to 3-owners in spite of having had knowledge of said agreement of sale in his favour and as such he is entitled to declaration that the sale deed made in favour of defendant 5 is null and void and not binding on him and also for possession of ABCD and IJKL portions shown in the sketch along with specific performance by execution of registered sale deed by defendants. (b) According to defendants 1 to 3, they did not enter into any agreement of sale with plaintiff nor they received any amount from him, but he was collecting rent from other tenants. When he pleaded that those tenants are not giving rent and want power of attorney, having had confidence in the plaintiff, they signed blank stamp paper brought to Bombay, which has been later converted by him into an agreement of sale by misusing the confidence, and denied agreement of sale and also the alleged dispossession from ABCD portion by them. They admit execution of a registered sale deed in favour of defendant 5 after receiving Rs. 83,000 as sale consideration and plead defendant 5's possession over the suit property other than EFGH portion in occupation of the plaintiff as a tenant and consequently, prayed to dismiss the suit. (c) It is the case of defendants 4 to 6 that defendant 5 has purchased the suit property from defendants 1 to 3 for valuable consideration and he is in possession of the same except EFGH portion in possession of plaintiff, for which HRC proceedings have been initiated but, the plaintiff, with mala fide desire not to vacate said EFGH portion, has come forward with alleged agreement of sale, not executed by defendants 1 to 3. At any rate, according to them, as the defendant 5 is a bona fide purchaser for value without notice of the agreement of sale alleged, the plaintiff is not entitled to any relief claimed. Hence, they also requested to dismiss the suit of plaintiff. (d) The plaintiff examined himself and 4 witnesses in support of his case. None was examined for defendants 1 to 3. However, power of attorney holder/of defendant 5 was examined as D. W. 1 besides one more witness for defendants 4 to 6, After hearing and considering the evidence adduced, the Trial Court decided following Issue Nos. 5 to 11, additional Issue Nos. 1 and 2 in favour, Issue Nos. 2 and 3 against whereas, Issue Nos. 1 and 5 partly in favour and against the plaintiff and decreed the suit of the plaintiff: "1. Whether the plaintiff prove that he is tenant of the two premises marked by letters ABCD and EFGH? 2. Whether plaintiff proves his forceful dispossession from abcd portion on 10-3-1990, when he had allegdly gone to dandeli as contended in para 9 of the plaint? 3. Whether plaintiff proves that the possession of the defendants
